Panama President Proposes Huge Canal Expansion to Boost Business

PANAMA CITY, Panama – Panama's president will ask voters to approve a multibillion-dollar plan for expanding the Panama Canal to accommodate huge modern cargo ships in what would be the waterway's biggest modifications since it opened in 1914.

President Martin Torrijos planned to outline the project Monday, giving details on adding a third series of wider locks, expanding the canal basin fed by the Chagres River and building a system to recycle some of the water that now is allowed to flow out to sea.

Voters will have the final say in a referendum later this year.

The government has not yet put a price tag on the proposal, but independent analysts estimate it would cost $5 billion to $8 billion for work expected to take at least six years. That would be a significant undertaking for a government with an annual budget of $6.5 billion.

The project is fueled by the government fears the canal's business will erode because it cannot handle today's mammoth commercial ships, which carry twice as many cargo containers as those that fit in the waterway's locks.

Built by U.S. engineers a century ago, the canal uses a series of parallel locks 108-feet-wide to move ships from the Atlantic to the Pacific on a 50-mile route that rises to 105 feet above sea level at its highest.

In 2005, 13,000 ships passed through, paying $1.2 billion to Panama in canal fees and for maintenance and other services. The canal, which the United States returned to Panamanian control on Dec. 31, 1999, handles about 5 percent of international trade each year.

The United States remains the number No. 1 user of the route, followed by the South American countries as a group and China.

The idea of widening the canal is popular among Panama's 2.8 million people, with polls saying about 55 percent favor expansion, 19 percent oppose it and the rest are undecided.

Critics say the project will be too expensive and is risky because of uncertainties about the growth of maritime trade and the world's economy.

Fernando Manfredo, a former administrator of the canal, argues there are better ways for Panama to bolster its role in shipping.

"Our most important natural resource is not the canal, but our geographic position," Manfredo told The Associated Press.

Manfredo is the leader of a group that promotes building a $600 million megaport at the Pacific end of the waterway where the big ships would transfer loads to smaller vessels that would carry them through the canal and on to ports on the Atlantic.

The group says there are only about 300 ships too large for the canal and their trade routes are primarily in the Pacific, where the six largest megaports are located.

"The canal will remain the best alternative regardless of the size of the ships," Manfredo said.

Supporters of the plan disagree.

Roberto Eisenmann, a banker and political analyst, said the canal's capacity is reaching its limit and expansion would help ease the strain.

He added that private banks had indicated a willingness to finance the project.